Berachain: An Innovative Public Chain Focusing on Decentralized Finance

Berachain is an EVM-compatible Layer 1 public chain launched at the end of 2021, built on top of the Cosmos SDK, and adopts a Proof of Liquidity (PoL) consensus mechanism. The project focuses on solving liquidity issues in the Decentralized Finance (DeFi) sector.

Development History

Berachain originally stemmed from a series of bear-themed NFT projects, including Bong Bears, Boo Bears, Baby Bears, Band Bears, and Bit Bears. After experiencing the ups and downs of the crypto market, the project team recognized the critical role of liquidity in Decentralized Finance, and thus decided to design an L1 public chain focused on optimizing liquidity.

In November 2023, Berachain began its internal testing. On January 11, 2024, the public testnet "Artio" officially launched, attracting the deployment of multiple native protocols and cross-chain projects. It is rumored that the Berachain mainnet is expected to be launched in the second quarter of 2024.

Financing Situation

In April 2023, Berachain raised $42 million in funding, led by Polychain, with participation from institutions such as OKX Ventures, achieving a valuation of $420 million.

Core Mechanism

Polaris EVM

Berachain is built on the Polaris EVM framework, which combines EVM with Cosmos SDK to provide developers with powerful tools. Its main advantages include:

1. Developer-friendly for Ethereum
2. Achieving cross-chain interoperability through IBC

PoL Consensus Mechanism

The Proof of Liquidity (PoL) mechanism is the core innovation of Berachain, aimed at solving on-chain liquidity issues:

1. Users obtain BGT governance tokens by providing liquidity.
2. BGT can be delegated to validators to participate in network consensus.
3. Validators and delegators receive BERA and HONEY rewards
4. Validators can vote on BGT inflation

Compared to traditional PoS, the PoL mechanism has advantages in incentivizing liquidity, decentralized inflation, and coordinating the relationship between asset issuers and validators.

three token model

Berachain builds its ecosystem using three types of tokens:

• BGT: Governance token, obtained only by providing liquidity.
• BERA: Fuel token used to pay transaction fees
• HONEY: Native Over-Collateralized Stablecoin

This model further stimulates on-chain liquidity by separating governance rights and transaction fees, as well as diversifying the choice of staking assets.

Ecological Projects

1. the honey jar: Berachain ecological entry, responsible for user education and project incubation.
2. Beradrome: DEX and Restaking liquidity market
3. Beradoge: A highly关注的 Meme token project
4. Sudoswap: Cross-chain NFT AMM Platform
5. Beramonium: On-chain gaming project
6. Redacted Cartel: Decentralized Finance yield protocol

Outlook

Berachain, through its innovative economic model and consensus mechanism, is expected to lead a new wave of innovation in the Decentralized Finance space. However, the long-term success of the project will also require attention to several aspects such as its future development, ecosystem expansion, and the security of the protocol.